ins045-02 annual report 2004 - blue marlin holdings

1 Insinger de Beaufort Annual Report 31 December 2004

Contents

Directors and Professional Advisors 2Senior Executives 3Salient Features 4Chairman’s Report 5Report of the Executive 6Directors’ Approval 14Auditor’s Report 15Five Year Summary 16

Financial Statements Group Profit and Loss Account 18Group Balance Sheet 19Consolidated Statement of Changes in Equity 20Group Statement of Cash Flows 22Company Profit and Loss Account 24Company Balance Sheet 25Company Statement of Changes in Equity 26Company Statement of Cash Flows 27

Notes to financial statements 29

Other information List of significant investments 63

Insinger de Beaufort Offices 64


Insinger de Beaufort Holdings S.A.

Board of DirectorsKardol, Bas ChairmanKantor, Ian Chief Executive OfficerSieradzki, Peter Chief Operating OfficerGeorgala, Steven (Non-Executive)

Audit CommitteeSieradzki, PeterGeorgala, StevenMooij, Rob

Legal AdvisorsLuxembourgElvinger, Hoss and PrussenMaitland & Co

Registered office and numberInsinger de Beaufort Holdings S.A.66 Avenue Victor HugoL-1750 LuxembourgR.C. Luxembourg B49429

Directors and Professional Advisors


Group Management Board

Kantor, IanHuman, KobusMooij, RobPeijster, FransSieradzki, PeterWhite, Piers

Private Banking

EuropePeijster, FransBeaufort, Rijnhard deBeffort, ClaudeDonatone, VitoKreder, RobertKun, Eduard van derReijns, LoekSnijders, JeroenTilman, FransVink, Jan deVismans, HermanWijburg, Nico

United KingdomBerkowitz, TrevorGillow, CharlesMarlow, EdwardMun-Gavin, DavidSchewitz, Kelvan

Treasury ServicesBoddéus, ElsaSpeld, Alexander van der

Institutional Clients

United Kingdom

Bond Broking Blackwell, AndrewBruell, NickReynolds, MarkSyriopoulos, Dionissis

Equity Trading Dunnoos, ElieGoldbart, IanGraft , RussellMartin, FrankOlstead, SimonPeskin, AndrewShaw, ElliottSimon, JohnWarnford-Davis, DarryllZucker, Adam

Corporate Finance/BrokingAllen, JasperCastro, LouisFox, SimonGoschalk, StephenLawman, DavidWard, Peter

Europe

Equity TradingLeur, Patrick vanPluijgers, HansScheper, Harry

Corporate FinanceReitsma, Krijn

Senior Executives

Asset Management

Europe and South AfricaHuman, KobusDugmore, InaEster, GuyMartens, EelcoWilliams, DavidYeo, Peter

JerseyCoote, TimothyCuming, NigelHuelin, ChristopherLovett, Grahame

Group

Finance & ControlBaltus, MarcMooij, Rob

Secretary Staring, Mike

Marketing & Communications Bongers, Han

Internal Audit Pickott, Francis

Operations and SupportEurope

Baltus, MarcWitjes, Sjarrel

Operations and Support United Kingdom

Howard, David


Salient Features

ResultsGross income (million)Operating profit (million)Profit before tax (million)- before amortization of goodwill- after amortization of goodwill and including profit

on sale of subsidiaries

Profit attributable to shareholders (million)- before amortization of goodwill and profit on sale of subsidiaries- after amortization of goodwill and profit on sale of subsidiaries

Per ordinary shareDiluted Earnings (cents)- before amortization of goodwill- after amortization of goodwillDividends (cents)

Balance sheetTotal assets (million)Shareholders’ equity (million)Number of ordinary shares of EUR 2.00 each in issue (million)

OtherAssets under management (excluding fiduciary assets) (billion)

Number of staff employed at year-end

2004

€ million75.4

5.9

3.32.4

3.72.9

23.923.912.0

366.549.212.9

4.9

436

2003

€ million90.13.9

2.343.0

2.643.3

325.2211.3

8.0

472.239.610.3

4.4

434

Change

%(16)%

52%

45%(94)%

46%(93)%

(93)%(89)%

50%

(22)%24%25%

11%

0%


The environmentWe are operating in an environment where investors are in search of returns. Low interest rates, diminishing credit spreads and low volatility in equity markets make life difficult. In this environment, Insinger de Beaufort, as an independent organisation with a highly focused and committed approach, has succeeded in providing its clients with relatively good investment returns while remaining within the respective risk profiles. This thorough approach is well received by clients, has contributed to the growth of last year, and provides a basis for further growth.

Financial resultsThe group reports a net profit after tax of € 2.9 million for the year 2004. This is after accounting for non-recurring redundancy expenses of € 2.7 million.

The operational result, being profit before tax for the year 2004 excluding non recurring items as the result on disposals and redundancy expenses, amounted to € 5.9 million, compared to € 3.9 million for 2003 (which includes four months of profits from the divested interest in the Trust Group and a full year of profits from the divested interest in the Property Development Finance unit). Adjusted for this, the group’s current ongoing activities again showed a considerable improvement in the operational result over the prior year from a pro forma 2003 loss of € 2.8 million to a profit of € 5.9 million for 2004. In particular, this was attributable to increased revenue from Asset Management, Private Banking and UK Equity Broking, together with our ability to contain costs.

As from the financial year 2004, International Financial Reporting Standard Number 3 has been applied with goodwill no longer being amortised but tested for impairment of its carrying value. No impairment charge had to be booked in 2004.

With the early exercise of a major part of the outstanding warrants and the repayment of the 9% Fixed Rate Unsecured Loan Notes 2008 in June, we further improved our financial position and realised a reduction in future interest costs.

Strategy and structureThe realignment of our business that was realised last year has made us focus on our core financial services businesses: Private Banking, Asset Management and Institutional & Corporate Clients. The past year was the first full financial year where our activities have been solely focused on these areas. There is clarity on the direction of the group and on the way forward. During the year we have seen positive development in both staff morale and client activity. Our energy is fully devoted to providing the best possible services to our clients.

Corporate governanceHaving a proper corporate governance structure in a financial services organisation is essential. We are constantly reviewing our structure to ensure that we comply with the relevant standards. Equally important is our constant attention and commitment to embed a high degree of responsibility in the behaviour at all levels in the organisation, as this is the basis of good governance.

Board compositionDuring the year there were no changes to the board.

OutlookWe are now looking to build further on the solid basis that we have established. Keeping our focus and applying all our talents with discipline and determination will further grow the business. The creation of an environment where we can develop creative answers to the challenges that we and our clients are faced with in the current financial markets is central to our strategy. This allows us to attract top quality staff that wish to share in the success of the group. We look forward to continuing this development.

15 March 2005

Bas Kardol Chairman, Insinger de Beaufort Holdings S.A.

Chairman’s Report


2004 Review This past year has been the first full year in which we have operated exclusively in our refocused activities: Private Banking, Asset Management and Institutional & Corporate Client services. Our energy is now fully devoted to the further development of these areas, which are already proving to be successful. Both the direction we are taking and the way in which we are moving forward are clear. Independence and entrepreneurship are embedded into our culture, which is reflected in the way we service our clients and seek solutions. We believe that continuing along this path will benefit all our stakeholders.

This review first looks at our strategy and then outlines the development of our business activities.

Strategy Over the past few years we have focused on the realignment of our business and on providing financial services only in those areas where we can truly add value and offer exceptional expertise. The past financial year has been the first full year in which our operational activities have been solely focused on these areas, offering services to private clients, professional intermediaries and corporate and institutional clients. We have started to give particular emphasis to: owner-managed private companies; small- to medium-sized listed companies; the client and his family; the companies themselves and their pension funds. Separately, we serve institutions that invest in listed companies.

While we have been operating under on-going market difficulties, we have demonstrated that providing added value to our clients remains key to our success. We continue to look for ways to provide enhanced returns while keeping within the risk profile of the client. As the company is predominantly owned by management and staff it creates an entrepreneurial working environment that allows us to think and act independently. Embracing ‘open architecture’, we select the best available products to meet the needs of our clients, irrespective of whether these products have been developed in-house or by third parties. This allows us to attract and retain not only clients but also high quality staff who want to contribute to the destiny of the organisation and its clients. This concept is an important part of our positioning and branding, as is our staff share ownership.

New inflow of assets under management remains an important indicator of our success. Together with other annuity income sources, it provides an indication of the longer term economic value of the group. Although our type of annuity income is not of a completely fixed nature and is somewhat correlated to markets, it does provide a certain level of steady income to counter our more volatile transaction-based income. In our current mix of income we aim to increase our annuity-based income for the longer term.

The Private Banking unit has reinforced its strong position in the market. This is particularly the case in the Dutch market, which has a stable and loyal client base, together with a growing number of new clients. This is a result of the high quality spread of services we offer, as well as the solid performance we achieved on managed client assets. Our London office will be using the same entrepreneurial and transparent approach that’s based on open architecture to build our position in the UK private banking market in the coming years. These developments will continue to add impetus to our annuity-based income from the Private Banking business.

Report of the Executive


The Asset Management unit has continued to benefit from its successful mix of investment funds and excellent distribution position in the Dutch intermediary market. The expansion of distribution to the UK intermediary market has proven to be a good strategy and is producing an increase of funds that has exceeded expectations. The performance of this unit is well underpinned by the outstanding investment returns achieved by the team of talented people working within it. The unit is well positioned to expand its investment products and to widen its investment services to institutional investors. It will continue to generate considerable annuity-based income.

The Institutional & Corporate Clients units have more volatility in their income. The past year has seen a recovery with increased activity in equity stock broking and corporate finance in the UK. Together with bond broking, these UK activities have produced an impressive result. By complementing each other, they have mitigated the volatility of their combined income. Although these services are aimed at professional clients, our focus on specialised services for the owner-manager and his family creates a strong link to private banking. Our UK corporate finance team specialised in listings on the Alternative Investment Market (AIM) fits very well in this respect. Once again the Amsterdam Institutional Equity Sales, Research and Broking unit had a difficult year and has had to adapt to the changed market environment within the Dutch institutional market. The equity broking team has focused on executing a specialised high quality service that revolves around equity sales and research activities that meet the new needs of institutional and corporate clients in the dramatically changed economic environment. The extensive knowledge and experience in our organisation generate insights that are of great benefit to clients in this market and provide support to understand and solve the challenges they are faced with today: the search for returns while understanding the risks.

These three business lines continue to be supported on a decentralised basis from locally managed Operations and Finance & Control units. This is combined with a detailed financial control that operates centrally. In Amsterdam a substantial part of the operations unit, including systems development and IT support services, is in the process of being outsourced to a professional service provider. This enables us to benefit from scale advantages that would otherwise be impossible to reach on a stand-alone basis. These advantages are not only of a financial nature but will also enable qualitative improvements in the short and longer terms.

We continue to monitor our businesses as an ongoing process and aim to generate a consistent sustainable growth in profitability, while mitigating risk. Our risk management process is reviewed constantly and expanded further where needed. In this process we maintain a highly liquid balance sheet. Operating without proprietary positions also strengthens the independence and transparency inherent in the delivery of our services. This is an important element of our positioning. Corporate governanceBeing active in the financial industry means that risk management is key to our operations. This is nothing new. It has always been important and is embedded in our culture. Identifying potential risks, setting policies on risk tolerances, and controlling and monitoring risk positions is an integrated set of activities that is fundamental to the whole of our business.

Members of the executive management are responsible for ensuring that risks and controls are addressed in each of their operations. Our risk management department provides the operational units with conceptual support and tools in order to ensure that the risk management process is adequately executed in a consistent manner throughout the group.


Our Compliance Department, the Risk Committee and the Asset & Liability Committee respectively provide the expertise and independent input for the management of compliance risks, credit risks and market and liquidity risks.

Overlaying this process our internal audit independently monitors the ongoing adequacy and execution of this structure. They report their findings to responsible management and directly to the Audit Committee which oversees our risk management and control systems on behalf of the Board.

Our policy on risk tolerance is based on an ongoing assessment of the environment that emphasises high liquidity, limited credit risk exposures and a healthy capital base. In addition, the group has a policy to hedge all foreign currency exposure on our balance sheet.

Consolidated Results

On a like-for-like basis, the ongoing business showed an increase of gross income of € 10.9 million (17%). The reported gross income decreased by € 14.7 million to € 75.4 million. It should be noted that the 2003 consolidated figure includes the operations of the former Trust Group activities until 30 April 2003 and a full year of operations of United Trust Bank (the Property Development Finance unit) that was sold with effect from the end of 2003. In particular the continued increase in our annuity based income is encouraging. This remains one of our focus areas as this provides a stable basis for our results.

The operational result, being profit before tax for the year 2004 excluding non recurring items as the result of disposals and redundancy expenses, amounted to € 5.9 million. The comparative figure for 2003 was a profit of € 3.9 million, but this figure included four months of Trust Group profits and a full year of profits from the Property Development Finance unit. Taking this into account the group’s current ongoing activities showed again a considerable improvement over the previous year. This was mainly attributable to increased revenue from almost all units, while costs were able to be contained. In particular Asset Management, Private Banking and Equity Broking UK showed significantly improved results underlining our strategy of focusing on our core competencies.

Our current operational profit of € 5.9 million compared to a pro forma 2003 operational result of a loss of € 2.8 million, excluding the results from the Trust Group and the Property Development Finance unit, shows the important improvement in the results of our ongoing business.

Starting the financial year 2004 International Financial Reporting Standard number 3 is applied and goodwill is no longer amortised but tested for impairment of its carrying value. No impairment charge had to be booked in 2004.

Report of the Executive(continued)

(million Euro)

Gross income

Operational profit before tax

Ordinary profit before tax

and amortisation of goodwill

Ordinary net profit before

amortisation of goodwill

Net profit after goodwill

amortisation

Diluted earnings per share

before amortisation of

goodwill (in Euro cents)

2004

75.4

5.9

3.3

3.7

2.9

23.9

2003

90.1

3.9

2.3

2.6

43.3

325.2


Our net result, after redundancy expenses of € 2.7 million, amounted to € 2.9 million compared to € 43.3 million for 2003, which included the profit realised on the sale of the Trust Group of € 64.2 million and a goodwill charge of € 23.3 million.

In June the greater part of the warrant holders accepted the offer for an early exercise or sale of the warrants and as a consequence 2.6 million warrants have been exercised and 0.3 million purchased. This resulted in a net increase in capital of the Group of € 11.4 million. At the same time this allowed the 9% Fixed Rate Unsecured Loan Notes 2008 in the amount of € 10.4 million to be repaid in full. This has reduced the interest costs of the Group, of which the full benefit will be reflected in 2005 and subsequent years. Together with the net result over the year and other movements, capital resources increased from € 39.7 million to € 49.3 million, providing a sound capital base for the operations of the group. Net of warrants held in treasury by the group the number of outstanding warrants is 0.3 million as at 31 December 2004. The group maintains a highly liquid balance sheet and most of the assets are invested in cash or cash equivalent form and any loan assets are collateralised by liquid securities.

The assets under management amounted to € 4.9 billion as at 31 December 2004 (2003: € 4.4 billion). The increase was due to both a net inflow of new assets from clients and market value appreciation.

The number of employees increased slightly from 434 to 436.


Private Banking

Gross incomeGross income increased to € 30.5 million from € 28.8 million. The past year showed an inflow of new assets under management of € 148 million demonstrating the success of the unit in attracting new private clients in an increasingly competitive market. The total assets under management grew from € 2,717 million as at 31 December 2003 to € 2,865 million as at 31 December 2004. Our Private Banking activities continued to grow the unit’s income and operational result. The transparent open architecture of the delivery of the services combined with the achievement of good investment returns for our clients remains a successful formula and is highly regarded by our increasing numbers of clients. The placing during the year of a number of specially developed investment products and real estate partnerships (CV’s) also contributed to this success and is becoming an important complement to traditional investment services.

Main developments The Private Banking unit runs a strong investment process on the back of our group’s macro-economic investment process. This has proven to be very successful with a good outperformance for all model portfolios in their respective risk categories. In our continued search for alternative investment opportunities, a number of specially designed bonds and real estate partnerships have been developed and placed during the year. In the application of our investment views we have achieved a number of efficiency improvements, allowing our private bankers to focus more on the actual needs of our clients. We continue to strive to improve the servicing of our clients in an independent and transparent manner.

The London Private Banking unit provides a dedicated personal approach to its mostly international clients throughout the world and is now further developing the UK resident client base. During the year it has been successful in attracting new clients in a difficult market and has seen a net inflow of managed investment portfolios.

The development of private banking in the Italian branch has been positive and shows good inflows of new money under management. However, the unit is still operating on a subscale level. This issue is being addressed.

The Luxembourg unit performed well during the year growing both turnover and contribution in 2004.

Treasury continued to work closely with the private bankers in their search for attractive investment alternatives for standard money market products. They develop structured products through major institutions in the financial markets.

Future developmentsThe Private Banking units remain focused on the application of a strong investment process through structured implementation. This ensures that our private bankers are able to focus on understanding the clients’ needs and provide services that are more bespoke, independent and transparent. We recognise that our clients have different interests and we intend to continue organising specific events where those interests can be explored and shared. Where appropriate, associates provide clients with services that augment our own expertise in asset management and related areas. This has already proven to be successful and will result in a growing number of clients and new assets under management. We plan to develop further these private banking activities in the UK market in the coming years, potentially through the acquisition of teams of private bankers or private banking businesses that would have a natural fit with our organisation.

Report of the ExecutiveThe Operating Units


Asset Management

Gross incomeGross income grew to € 24.0 million from € 19.9 million. The past year showed a net inflow of new assets under management of € 293 million reflecting the continued success of our range of funds and programme products. The total assets under management increased from € 1,596 million as at 31 December 2003 to € 1,889 million as at 31 December 2004.

Main developmentsOur highly effective and well run investment process designed to develop a macro economic view and our thorough asset manager selection process have together provided the basis for a good return in the investment funds that we manage. The year under review saw continued growth in assets under management. Despite the difficult European mutual fund environment, both the UK and Dutch distribution entities recorded satisfactory net inflows, albeit at a slower pace than 2003. Strong investment performance from the unit’s specialty and hedge investment funds also generated substantial performance fees and attracted good new inflows from institutional investors. With the basis of a strong manager selection investment process together with a disciplined in depth approach to its own specialities of Equity Income, European long/short and Convertibles, the unit should continue to benefit from the market shift to ever increasing specialisation. Our funds continue to be distributed through independent financial advisors; the distribution in the UK market that was started in 2003 continues to develop very successfully. The unit has also diversified into its own specialised funds. Through delivering a good investment performance to clients, our operations in Jersey and the Isle of Man succeeded in remaining a stable and profitable business in a difficult environment.

The Asset Management unit leads the group-wide investment process in a well-structured manner and services the other units of the group. This process is key to our group as it establishes the basis of the investment performance we achieve for our clients.

Future developmentsBecause our thorough approach and good track record are of great benefit to institutional investors, the unit is looking to expand its distribution to this market. The unit will look to extend its distribution activities in South Africa and the UK, where we see good growth prospects for our funds. The further development of our own managed funds will continue.


Report of the ExecutiveThe Operational Units(continued)

Institutional and Corporate Clients

Gross incomeGross income decreased to € 19.1 million from € 22.2 million for the Institutional and Corporate Clients business units. The 2003 income figure includes a full year of income from the property development finance unit that was sold at the beginning of the year. When adjusting the 2003 income figure for this unit, the gross income increased by € 0.9 million when compared to last year. The UK Equity Broking and Corporate Finance units showed increased income levels that were partly offset by decreased income levels from the UK Bond Broking unit and the Equity Sales Research and Trading unit in Amsterdam. The UK broking units managed to increase the trading volumes in 2004, while the Amsterdam unit suffered from further declining volumes in the Dutch equity market.

Main developmentsActivity in the UK’s Institutional and Corporate Clients market has improved during 2004. In particular the volumes in the equity broking unit and quality of the corporate finance transactions has improved while UK bond broking showed a small decrease in income compared to record levels achieved in 2003. This decrease in bond broking turnover is to be expected when equity trading volumes increase. We have been successful in our constant search for opportunities in the market for our clients. This is an important factor that differentiates ourselves in a very competitive market and is key to our continued success. Our UK Corporate Finance unit has benefited from its well established position in the Alternative Investment Market (AIM). It has assisted a number of clients with a listing on this market and, again, has a good number of projects underway. We expect that the UK units will benefit from the move to new premises which took place in January 2005 and will provide an inspiring new

working environment. In Amsterdam our Equity Sales Research and Trading unit experienced, again, very low volumes and had to go through a further downsizing to bring the cost level down. The unit has refocused on providing a specialised execution service and has developed some promising new investment advisory products for the institutional market.

Future developmentsThe UK institutional broking units are dependent on market volumes and opportunities available. Although we expect the equity and bond broking markets in general to remain difficult in the coming years, our business activity will be able to gradually improve. The unit has been successful in finding opportunities for their clients and will continue to do so. We see no indications that the contribution from these units in 2005 would be substantially different from last year. We experienced an upturn in our corporate finance activities last year and expect this to continue in 2005. The number of mandates in hand looks promising and we have acquired enhanced capacity to place equity issues to institutional investors who are active in the AIM market. The Equity Sales Research and Trading unit in Amsterdam has developed some promising new products for institutional investors. We expect the unit to succeed in servicing a growing number of clients with these products and to gradually grow its income in the coming years.


Systems development In 2004 we saw a considerable change in the business process outsourcing market, with new opportunities opening up for us. With the signing of a letter of intent at the close of 2004, we made a significant step in the outsourcing of a major part of our business support processes. The outsourcing to a professional supplier of our back-office operations, systems development and IT support in Amsterdam will enable us to benefit from the advantages of operating on a larger scale. These advantages will include improved functional support at a lower cost. The planned implementation during 2005 will include the replacement of our back-office systems in Amsterdam, which will have a significant impact on the operations and IT departments in Amsterdam. These departments will be transferred to the supplier in 2005. The new operating environment will be on a substantially ‘straight-through’ basis and enable us to reduce operational risk. With the outsourcing of these processes to a professional provider, we will be able to benefit better from future technological enhancements. Dividends and earnings per share The basic earnings for 2004 is € 0.250 per share. On a fully diluted basis the earnings were € 0.239 per share. On the basis of the development of the operating profits in the past year and the expectations of the coming year, the board proposes to declare a dividend of € 0.12 per ordinary share (2003: € 0.08).

Outlook In the past year the organisation has built further on the refocused positioning established in 2003. It is clear that this is paying off. Although we continue to operate in challenging difficult markets, and expect this to continue, our goals are clear. We are in a unique position in that we are an independent organisation with significant ownership by management and staff. This creates an entrepreneurial atmosphere that is reflected in our services to clients. It also enables us to attract and retain high quality people that aspire to this type of working environment. This is clearly a differentiating feature of our organisation and an essential part of our culture and positioning.

The investment return achieved in the past periods for our clients and the continued growth in our clientele is driven from this highly focused and committed approach. We aim to continue to develop our business in a sustainable way without compromising our standards on quality. This will mean, predominantly, growth through our existing businesses, although we do not rule out acquisitions that will add value immediately and fit with our culture. With continued stringent cost control we expect that this will lead to increased profitability over the coming years. 15 March 2005

Ian KantorChief Executive Officer


The directors are responsible for monitoring the preparation and reviewing the reliability of the Financial Statements, the underlying accounting policies and the integrity of all information included in this report.

The independent auditor is required to report whether the annual Financial Statements fairly present the operations and financial position of the company and group. The Financial Statements are prepared in accordance with international accounting standards.

Internal controlThe controls throughout the group concentrate on focused critical risk areas. These areas are identified by operational management, confirmed by group management, monitored by directors and reviewed annually by the external auditors.

The directors report that the group’s internal controls are designed to:

- provide reasonable assurance as to the integrity and reliability of the Financial Statements

- adequately safeguard, verify and maintain accountability of assets, and

- prevent and detect fraudulent financial reporting.

Such controls are based on established policies and procedures are reinforced by appropriate risk management forums and processes. Internal controls are developed to ensure that their cost does not exceed their benefit.

The controls are implemented by suitably qualified personnel with appropriate segregation of duties and are monitored throughout the group. Processes are in place to monitor the effectiveness of internal controls to identify material breakdowns and to ensure that corrective action is taken.

Going concernThe annual Financial Statements are prepared on a going concern basis. Nothing has come to the attention of the directors to indicate that the company will not remain a going concern until the next reporting date.

ApprovalsThe Financial Statements, which appear on pages 17 to 28, were approved by the Board of Directors on 15 March 2005 and are signed on its behalf by.

Ian Kantor Chief Executive Officer

Directors’ Approval


Auditor’s Report

In our opinion, the Financial Statements and Consolidated Financial Statements present fairly, in all material respects, the financial position of Insinger de Beaufort Holdings S.A. and the consolidated group as of December 31, 2004 and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

The Management report is consistent with the Financial Statements.

Deloitte S.A.Réviseur d’entreprises

B. MichaelisPartner

15 March 2005

To the shareholders of Insinger de Beaufort Holdings S.A.

We have audited the Financial Statements and Consolidated Financial Statements of Insinger de Beaufort Holdings S.A. for the year ended December 31, 2004 consisting of the balance sheet, the profit and loss account, statement of changes in equity and the statement of cash flows as well as the notes to the financial statements for the year then ended and have read the related Management report. These Financial statements and the Management report are the responsibility of the company’s Board of Directors. Our responsibility is to express an opinion on these Financial Statements based on our audit.

We conducted our audit in accordance with the International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by the Board of Director, as well as evaluating the overall Financial Statements’ presentation. We believe that our audit provides a reasonable basis for our opinion.


Five Year SummaryInsinger de Beaufort Holdings SA Five year summary*

* Figures have not been adjusted for sale of Trust Group1 Including 4 months of Trust Group activities2 Including full year of Trust Group activities

Euro

ResultsGross income (million)Operating profit (million)Profit before tax (million)- before amortization of goodwill- after amortization of goodwill and

including profit on sale of subsidiaries

Profit attributable to shareholders- before amortization of goodwill and

profit on sale of subsidiaries (million)- after amortization of goodwill and

profit on sale of subsidiaries (million)

Per ordinary share Diluted earnings (cents)- before amortization of goodwill- after amortization of goodwillDividends (cents)

Balance sheetTotal assets (million)Shareholders’ equity (million)Number of ordinary shares of EUR 2.00 (2000 and before USD 1.75) each in issue (million)

OtherAssets under management (excluding fiduciary assets) (billion)

Number of staff employed at year-end

2004

75.45.9

3.32.4

3.7

2.9

23.923.912.0

366.549.212.9

4.9

436

2003 1

90.13.9

2.343.0

2.6

43.3

325.2211.3

8.0

472.239.610.3

4.4

434

2002 2

149.29.9

0.4(15.9)

4.1

(12.2)

15.3(45.9)

6.0

573.486.226.1

4.6

1,078

2001 2

125.78.5

8.5(2.5)

8.7

(2.3)

32.9(8.7)

6.0

607.0102.125.9

5.2

1,120

2000 2

114.426.4

26.419.4

21.9

14.9

85.458.024.7

505.0108.925.9

5.7

920

Financial Statements for the year ended 31 December 2004



Group Profit and Loss Account for the year ended 31 December 2004

Interest income Interest expense Net interest income

Commission incomeCommission expenseOther operating incomeGross income

Personnel costs DepreciationOther general administrative expensesOperating profit

Share of profits from associatesRedundancy expense Profit before taxation

Taxation Profit after taxation

Income on sale of subsidiaries Amortization of goodwill Net profit after goodwill amortization

Profit attributable to minority interest Net profit attributable to shareholders

Interest on shareholders’ compulsory convertible loan note Net profit Earnings per share Basic earnings per share - before amortization of goodwill - after amortization of goodwill Diluted earnings per share - before amortization of goodwill - after amortization of goodwillDividend per share (in cents)

Notes

5

6

7

8

10

11

2004

€ 000’s 12,360 (6,814)

5,546

81,916(24,201)

12,11675,377

(40,530)(2,881)

(26,110)5,856

134(2,716)

3,274

4523,726

(825)-

2,901

32,904

- 2,904

25.025.0

23.923.912.0

2003

€ 000’s 18,146

(11,613)6,533

75,571(23,935)

31,88990,058

(50,443)(4,763)

(30,991)3,862

- (1,596)

2,265

2862,551

64,050(23,307)

43,294

(39)43,255

(575)42,680

335.9218.3

325.2211.3

8.0


Group Balance Sheet as at 31 December 2004

Assets Cash and balances with central banks Treasury bills Loans and advances to credit institutions Loans and advances to customers Debt securities and other fixed income securities - issued by public bodies- issued by other borrowersShares and other variable yield securities Investments in Associates Financial fixed assets Goodwill Tangible fixed assets Other assets Deferred tax assets Total assets Liabilities Amounts owed to credit institutions Amounts owed to customers Loan notes and other long term debt Other liabilities Total liabilities Capital resources Shareholders’ equity Shareholders’ compulsory convertible loan note Minority interests Total equity and liabilities Off-Balance sheet items: contingent assets Off-Balance sheet items: contingent liabilities

Notes

121314

151516171819202110

22232425

29

3232

2004

€ 000’s

9,43040,801

114,78291,033

17,276 16,145 3,8262,812 752

20,8689,317

30,2329,270

366,544

1,967270,462

9,18035,630

317,239

47,9841,224

9749,305

366,544

11,4648,148

2003

€ 000’s

25,22374,379111,353

147,900

19,386 21,144

4,271 -

838 20,52312,46725,843

8,919472,246

9,245363,061

26,64133,576

432,523

38,4241,200

9939,723

472,246

11,4649,536


Consolidated statement of changes in equity for the year ended 31 December 2004

1 This relates to the share buy back and cancellation of shares as proposed in the circular to shareholders dated 10 July 2003 which were approved in the shareholders meeting of 4 August 2003

Balance at 1 January 2003

Issued

Share buy back 1

Revaluation

Translation adjustments and other movements

Movement in treasury shares

Net result

Less share premium in Treasury stock

Balance at 31 December 2003

26,093,670

(12,169,520)

(3,585,642)

10,338,508

€ 000’s

52,187

(24,339)

(7,171)

20,677

€ 000’s

35,728

(33,464)

(70)

(7,719)

(5,525)

€ 000’s

(2,272)

1,162

(1,110)

€ 000’s

(16,102)

(2,196)

42,680

24,382

€ 000’s

-

1,200

1,200

€ 000’s

69,541

1,200

(57,803)

1,162

(2,266)

(7,171)

42,680

(7,719)

39,624

Shares Sharecapital

Sharepremium

Revaluationreserves

Otherreserves

Compulsoryconvertible

loan note

Total


2 Reference is made to note 28 Warrants for further explanation


Dividend

Exercise of warrants

Buy back of warrants

Reversal of unamor-tised interest on the 2008 loan note 2

Revaluation

Release of capitalised interest


Movement in treasury shares

Net result


10,338,508

2,579,189

(5,223)

12,912,474

€ 000’s

20,677

5,158

(10)

25,825

€ 000’s

(5,525)

6,706

(24)

(1,365)

(1,443)

(1,651)

€ 000’s

(1,110)

(32)

(1,142)

€ 000’s

24,382

(899)

(501)

(934)

2,904

24,952

€ 000’s

1,200

24

1,224

€ 000’s

39,624

(899)

11,864

(525)

(1,365)

(32)

24

(934)

(1,453)

2,904

49,208

Shares Sharecapital

Sharepremium

Revaluationreserves

Otherreserves

Compulsoryconvertible

loan note

Total


Group Statement of Cash Flows for the year ended 31 December 2004

Cash flows from operating activities Net profit Adjustment for: Taxation Profit attributable to minority interest Amortization of goodwill Depreciation of tangible fixed assets Income from associates ** Profit on sale of Trust Group Loss on sale of Bank Insinger de Beaufort PlcNet cash inflow from operating activities before changes in operating assets and liabilities (Decrease)/increase in operating assets: Loans and advances to credit institutionsLoans and advances to customersOther assets

(Decrease)/Increase in operating liabilities: Amounts owed to credit institutionsAmounts owed to customersOther liabilitiesNet cash (outflow) from operating activities before payment of taxation Taxation received /(paid)Net cash (outflow) from operating activities after payment of taxation Cash flows from investing activities Net investment in non - trading securitiesNet sale/(purchase) of fixed assetsCapitalisation of deferred considerationsNet purchase of financial fixed assetsSale of Trust GroupSale of Bank Insinger de Beaufort PlcNet cash inflow from investing activities

2004

€ 000’s

2,904

(452)(3)

-2,881(134)

-825

6,021

(11,896)17,367

(5,223)

(7,224)(59,725)

2,633(58,047)

101(57,946)

38,418190

(262)--

14,16152,507

2003

€ 000’s

43,255

(286)39

23,3074,763

-(64,235)

-6,843

(152,627)106,405

164

(11,932)(43,238)

13,258(81,127)

(1,254)(82,381)

26,185(3,898)(2,728)(1,795)

138,743-

156,507

** Represents the income from the 25% investment in UTB Partners Ltd


Group Statement of Cash Flows for the year ended 31 December 2004 (continued)

Cash flows from financing activities Movement in minority interestsDividends paidShareholders’ compulsory convertible loan note interestCancellation of compulsory convertible loan noteIssue of subordinated loan noteIssue of compulsory convertible loan noteRepayment of loansWarrant exerciseWarrant buy backShare buy backNet cash (outflow) from financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Net (decrease) in cash and cash equivalents Exchange differences Cash and cash equivalents at end of year

* Cash flows from operating activities include: Interest received Interest paid Dividends received

2004

€ 000’s

1(899)

-

---

(18,222)11,864(525)

(1,532)(9,313)

(14,752)

25,223(14,752)

(1,041)9,430

12,360 (6,814)

-

2003

€ 000’s

3,311-

(575)

(16,609)8,9291,475(198)

--

(72,763)(76,430)

(2,304)

22,230(2,304)

5,29725,223

18,146 (11,613)

-


Company Profit and Loss Account for the year ended 31 December 2004

Interest income Interest expense Net interest income

Commission income Commission expense Other operating incomeResults from subsidiaries Gross income

Other general administrative expensesOperating profit/(loss)

Profit/(loss) before taxation

Taxation Profit/(loss) after taxation Amortization of goodwill Net profit/(loss) after goodwill amortization Profit attributable to minority interest Net profit/(loss) attributable to shareholdersInterest on shareholders’ compulsory convertible loan noteNet profit/(loss)

Notes

5

6

8

2004

€ 000’s 1,303(921)

382

(21)(39)818

-1,140

(1,196)(56)

(56)

(48)(104)

-(104)

-(104)

-

(104)

2003

€ 000’s 3,502

(1,890)1,612

(160)(54)

(3,140)32,22530,483

(1,646)28,837

28,837

(50)28,787

(565)28,222

-28,222

(575)

27,647


Company Balance Sheet as at 31 December 2004

Assets Loans and advances to credit institutions Shares in subsidiary undertakings Goodwill Other assets Total assets Liabilities Amounts owed to credit institutions Loan notes and other long term debt Other liabilities Total liabilities Capital resources Shareholders’ equity Total equity and liabilities

Notes

161921

222425

2004

€ 000’s

65449,647

1,24941,186

92,736

-8,9296,396

15,325

77,41192,736

2003

€ 000’s

-49,647

1,24969,947

120,843

6126,36510,35436,780

84,063120,843



Share buy back


Net result


Dividend

Exercise of warrants

Reversal of unamortised interest on the 2008 loan note


Net result


Company statement of changes in equity for the year ended 31 December 2004

26,771,163

(13,385,580)

13,385,583

13,385,583

€ 000’s

53,542

(26,771)

26,771

26,771

€ 000’s

48,560

(33,464)

(70)

15,026

(3,611)

(1,365)

10,050

€ 000’s

14,619

27,647

42,266

(1,071)

(501)

(104)

40,590

€ 000’s

116,721

(60,235)

(70)

27,647

84,063

(1,071)

(3,611)

(1,365)

(501)

(104)

77,411

Shares ShareCapital

Sharepremium

Otherreserves

Total


Company Statement of Cash Flows for the year ended 31 December 2004

Cash flows from operating activities Net profit/(loss) attributable to shareholders Adjustment for: Taxation Amortization of goodwill Option recharge revenue

Net cash (outflow)/ inflow from operating activities before changes in operating assets and liabilities (Decrease)/increase in operating assets: Loans and advances to credit institutionsOther assets(Decrease)/increase in operating liabilities: Amounts owed to credit institutionsOther liabilitiesNet cash (outflow)/ inflow from operating activities before payment of taxation Taxation paidNet cash (outflow)/ inflow from operating activities after payment of taxation Cash flows from investing activities Net investment in new companyCash paid for acquisitions net of cash acquiredNet cash (outflow)/inflow from investing activities

2004

€ 000’s

(104)

48-

(822)

(878)

(654)-

(61)(4,538)(6,131)

(48)(6,179)

---

2003

€ 000’s

28,222

50565

(606)

28,231

9,4841,295

613,284

42,355

(48)42,307

(3,144)-

(3,144)


Company Statement of Cash Flows for the year ended 31 December 2004 (continued)

Cash flows from financing activities Dividends paidShareholders’ compulsory convertible loan note interestCancellation of compulsory convertible loan noteIssue of new subordinated loan noteWarrant buy backRepayment of capital loans from Insinger Finance SAShare buy backReceipt/(Repayment) of loansNet cash (outflow)/inflow from financing activities

Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Net (decrease)/increase in cash and cash equivalents Exchange differences Cash and cash equivalents at end of year

* Cash flows from operating activities include: Interest received Interest paid Dividends received

2004

€ 000’s

(1,071)-

--

(501)-

(4,976)12,726

6,178

(1)

-(1)

1-

1,303 (921)

-

2003

€ 000’s

(1,606)(575)

(16,609)8,929

-31,201

(60,305)(199)

(39,164)

(1)

-(1)

1-

3,502 (1,890)

-


Notes to the Financial Statements for the year ended 31 December 2004



1. General

Insinger de Beaufort Holdings S.A. was incorporated on 30 November 1994 as a ‘1929 Holding Company’ in the Grand Duchy of Luxembourg, and was listed on the Luxembourg Stock Exchange on 30 September 1997.

Together with its subsidiaries, Insinger de Beaufort Holdings S.A. (“the consolidated Group” or “the Group”) operates in the fields of private banking, asset management, securities trading and corporate advisory.

In order to reflect appropriately the banking character of the Group, the layout of the Financial Statements adopted is that of a bank holding company and complies with International Financial Reporting Standards (IFRS). These Consolidated Financial Statements do not represent the Company’s statutory accounts, which will be submitted for Luxembourg regulatory requirements.

For segmentation reporting the functional organisation of Private Banking, Asset Management, Institutional Clients, Operations & Support and Group has been used as primary and the regions as secondary segmentation information.

2. Summary of significant accounting policies

(a) GeneralThe Financial Statements of the Company and the Group have been prepared in accordance with International Financial Reporting Standards (IFRS).

The significant accounting policies applied in the preparation of these Financial Statements are set out below.

(b) Accounting conventionThe Financial Statements are prepared under the historical cost convention as modified by the revaluation of land and buildings, available-for-sale financial assets, financial assets and financial liabilities at fair value through profit or loss and investment properties, which are carried at fair value. Income and expenses are allocated to the reporting period to which they relate. Assets and liabilities are stated at face value, unless otherwise indicated.

(c) Early adoption of standardsIn 2004, the Group early adopted IFRS 3 “Business Combinations”. IFRS 3 requires simultaneous adoption with IAS 36 and IAS 38. The early adoption of IFRS 3, IAS 36 (revised 2004) and IAS 38 (revised 2004) resulted in a change in the accounting policy for goodwill. Until 31 December 2003, goodwill was:– Amortised on a straight line basis over a period of

10 years; and– Assessed for an indication of impairment at each

balance sheet date.

In accordance with the provisions of IFRS 3:– The Group ceased amortization of goodwill from

1 January 2004;– From the year ended 31 December 2003 onwards,

goodwill is tested annually for impairment, as well as when there are indications of impairment.

The Group has reassessed the useful lives of its intangible assets in accordance with the provisions of IAS 38. No adjustment resulted from this reassessment.

Notes to the Financial Statements for the year ended 31 December 2004


(d) Principles of consolidationThe Consolidated Financial Statements comprise Insinger de Beaufort Holdings S.A., its subsidiaries and companies over which it has management control. The list of significant subsidiaries and Group companies is disclosed in ‘Other Information’ on page 63. Subsidiaries acquired during the year are consolidated from the effective date of acquisition to the end of the year under review.

Subsidiaries disposed of are consolidated from the beginning of the year under review to the effective date of disposal.

(e) Revenue recognitionIn general revenue is recognised when it is realised or realisable, and earned. This concept is applied to the key revenue generating activities of the Group as follows:

Net interest revenues: Interest from interest-bearing assets and liabilities is recognised on an accrual basis over the life of the asset or liability.

Fees and commissions:Revenue from the various services the Group performs, is recognised when the following criteria are met: persuasive evidence of an arrangement exists, the services have been rendered, the fee or commission is fixed or determinable, and collectability is reasonably assured. Incentive fee revenues from investment advisory services are recognised at the end of the contract period when the incentive contingencies have been resolved.

(f ) GoodwillGoodwill comprises the difference between the fair value of net assets purchased on the effective date of the transactions determined on the basis of the accounting policies of the Group and the total cost of acquisition. As per 1 January 2004 the company applies IFRS 3, Business Combinations. This implies that the goodwill is recorded at cost less any accumulated impairment losses. Additional amortization is booked when the value of the goodwill is considered to be impaired. On disposal of certain cash generating units, the attributable amount of unamortized goodwill is deducted from the result of the sale of these units.

(g) Foreign currency translationAssets and liabilities of foreign subsidiaries and Group companies are translated into euros at year-end exchange rates and the income and expenditure of foreign subsidiaries are translated at the average rate of exchange for the year. The resulting translation gains and losses are recognised as an adjustment to shareholders’ equity.

Transactions arising in foreign currencies are translated into the currency of record at the approximate rate of exchange ruling at the date of transaction. Assets and liabilities denominated in foreign currencies are translated into the currency of record at the rates of exchange ruling at the balance sheet date. Resulting gains or losses are recognised in the profit and loss account.

(h) Loans and advances to customersLoans and advances to customers are stated at amortised cost net of a provision for doubtful debts based on a case-by-case valuation.


(i) Marketable securitiesThe Group’s portfolio of marketable securities is divided into three categories, of which the principal characteristics are the following:I. a held to maturity portfolio of financial fixed assets

which are intended to be used on a continuing basis in the Group’s activities;

II. a trading portfolio of securities purchased with the intention of resale in the short term and;

III. a financial asset is classified as available for sale if it does not properly belong in one of the two other categories of financial assets.

ad. I - Held to maturity – in accordance with IFRS 39.83 the Group values this category according to the available for sale category (see ad. III).

ad. II - Trading portfolio - listed securities held for trading purposes are stated at the market value prevailing at the balance sheet date. Unlisted securities are stated at fair value. When the fair value of unlisted securities cannot be estimated reliably, the securities are measured at cost less any impairment. Resulting gains and losses are recognised net in the profit and loss account.

ad. III - Available for sale - This category consists of equity securities. They are shown at market value. Revaluations are taken to a revaluation reserve in equity. Realised results at disposal are recorded through the profit and loss account.

(j) Tangible assetsThe valuation principles for tangible fixed assets are as follows:

Land and buildingsThis category includes land and buildings and leasehold improvements. Land and buildings are stated at fair value based on periodic revaluations by independent experts less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Interim adjustments are based on a property index basis. Valuations upwards are reflected in the revaluation reserve after taking into account deferred tax liabilities. Valuations downwards are taken to the revaluation reserve to the extent of any credit balance and then to the profit and loss account. Leasehold improvements are shown at cost net of accumulated depreciation.

Investment propertyInvestment property, which is property held to earn rentals and/or for capital appreciation, is stated at its fair value at the balance sheet date. Gains or losses arising from changes in the fair value of investment property are included in net profit or loss for the period in which they arise.

Other tangible fixed assetsOther tangible fixed assets are shown at cost net of accumulated depreciation.Depreciation is calculated using the straight-line method over the estimated useful lives of the assets taking into account estimated residual values. The following rates are applied:

Leasehold improvements 10.0 %Furniture and fixtures 10.0 % - 20.0 %Computer equipment 20.0 % - 33.3 %Motor vehicles 20.0 % - 25.0 %

Notes to the Financial Statements for the year ended 31 December 2004(continued)


(k) Shares in subsidiary undertakingsInvestments in subsidiaries are stated at the lower of cost and directors’ valuation. A provision is made for any permanent diminution in value. Foreign currency investments are translated into euros at the rates of exchange at the date of the transaction.

(k1) Interest in associatesAn associate is an enterprise over which the Group is in a position to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the investee. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Interests in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments.

(l) Financial fixed assetsIncluding under financial fixed assets are other participating interests, which are minority interests over which the Company has no significant influence, are stated at fair value.

(m) TaxationTaxes are calculated on profit before tax in accordance with the ruling tax legislation in the country of incorporation for the various Group companies included in the Consolidated Financial Statements. Where items are subject to withholding tax, tax is accrued to the extent that it is expected to be paid.

(n) Deferred taxationDeferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit, and is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

(o) Shareholders’ equityGroup shareholders’ equity consists of subscribed capital, share premium and other reserves.

(p) Minority interestsMinority interests represent the outside shareholders’ interests in the net equity of the Group companies at the balance sheet date in which minorities have an interest. Profit attributable to minority interests represents that portion of income attributable to the minority shareholders of Group companies, resulting from their percentage of ownership and the reported result net of taxes of the subsidiaries for the year.


(q) Financial instrumentsFinancial assets and liabilities are recognised on the Group’s balance sheet when the Group has become a party to the contractual provisions of the instrument.

(r) Derivative financial instrumentsDerivative financial instruments are initially recorded at cost and remeasured to fair value at subsequent reporting dates.

Changes in the fair value of derivative financial instruments that are designated as an effective fair value hedge are recognised immediately in the profit and loss account.

Changes in the fair value of derivative financial instruments that are designated as an effective fair value hedge of a net investment in a foreign entity are recognised directly in equity.

Changes in the fair value of derivative financial instruments that are designated and effective as cash flow hedges are recognised directly in equity. Amounts deferred in equity are recognised in the income statement in the same period in which the hedged firm commitment or forecasted transaction affects net profit or loss.

Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognised in the profit and loss account as they arise.

(s) Employee share optionsCosts associated with Employee Share Option schemes are accounted for based on the intrinsic value method.

(t) Cash Flow StatementThe cash flow statement is drawn up according to the indirect method, making a distinction between cash flows from operating, investment and financing activities.

Cash flows in foreign currency are converted at the average exchange rates during the financial year. With regard to cash flow from operations, the net profit is adjusted for income and expenses that did not result in receipts and payments in the same financial year and for changes in provisions and accrued and deferred items (other assets, accrued assets, other debts and accrued liabilities).

Cash and cash equivalents consist of cash, deposits at the Dutch Central Bank and deposits at other banks.

(u) LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.



3. Related parties

ESOPIn the 2003 financial statements it was indicated that approximately 0.9 million shares would be repurchased from the Employee Share Ownership Plan (“ESOP”) and ESOP Investment Companies, in line with the indication contained in the Circular to shareholders dated 10 July 2003. This buyback, against the market price as per 31 December 2003 of € 5.00 per share, had been accounted for in the Group’s capital as per 31 December 2003.In 2004 534,253 shares have been bought back from ESOP and ESOP Investment Companies at the then prevailing market price of € 6.00 per share. As per 31 December 2004 an estimated number of 250,000 shares are still to be repurchased from ESOP against a market price as per 31 December 2004 of € 7.00 per share. This repurchase has been accounted for in the Group’s capital as per 31 December 2004.

In December 2004 ESOP Investment Companies purchased call options from a Group company to acquire 3,850,000 shares in the Company as at 17 December 2007 at a price of € 7.50 per share. At the same time the ESOP Investment Companies sold call options to the same Group company to acquire 4,386,565 shares in the Company as at 17 December 2007 at a price of € 12.50 per share. A total net premium of € 3,052,509 has been paid by the ESOP Investment Companies to the Group company.

Remuneration of directorsThe remuneration of the directors is set out below and includes salaries, pension cost and social cost:

The Group has issued various call options to the directors and staff. One option gives the right to acquire one share in Insinger de Beaufort Holdings S.A. at the respective price. As at 31 December 2004 the directors of the Company held 190,000 options (2003: 190,000) with exercise prices varying between EUR 4.04 and EUR 4.70 (2003: EUR 4.04 and EUR 4.70) and with exercise period expiring from 25 October 2005 through 25 October 2008.

Non Executive Executive At 31 December advances made to directors amount to:The interest rate is LIBOR +1%

2004

€ 000’s 58

750 808

897

2003

€ 000’s 82

1,429 1,511

772



As announced on 14 November 2003 the Company sold a 75% controlling interest in one of its UK subsidiaries, Bank Insinger de Beaufort Plc (“the UK Bank”) to an investor syndicate led by Mr Graham Davin, Chief Executive of Insinger de Beaufort’s UK business interests and director of the Company until 14 November 2003. The sale was completed on 30 April 2004, with effect from 31 December 2003. The investor syndicate led by Mr Davin includes Mr Roger Tidyman, Managing Director and Mr Harley Kagan, Chief Financial Officer of the UK Bank. As part of the sale, the Group provided a GBP 2,500,000 fixed rate unsecured subordinated loan note to UTB Partners Limited. GBP 400,000 of the loan note should be repaid on or before 31 May 2010. The remaining should be repaid on or before 31 May

2014. Early redemptions are permitted. The interest is fixed for the term of the loan notes at 6.9% per annum. The loan note is guaranteed by Mr. Davin to be repaid by UTB Partners Limited in five annual equal instalments commencing on 31 May 2006. The guarantee has been capped at a maximum of GBP 2,100,000.

On 30 May 2003, the Company had sold an 87% interest in the Trust Group for an enterprise value of € 183.9 million plus € 15.0 million in deferred consideration loan notes, of which the repayment is dependent upon the future performance of the Trust Group. The deferred consideration has not been valued by the Company. The Company has retained a 13.6% interest in the Trust Group.

4. Discontinued operations and sale of subsidiary

5. Net interest income

Group Fixed income securities Other interest and similar income Interest income Interest expense Net interest income continued operations Net interest income discontinued operations Net interest income

Company Net intercompany interest income Other

2004

€ 000’s 3,7318,629

12,360(6,814)

5,546-

5,546

1,303(921)

382

2003

€ 000’s 4,667

13,47918,146

(11,801)6,345

1886,533

2,544(932)1,612


6. Other operating income

Group Administration fees Foreign exchange income Other Continuing operations Discontinued operations

Company Recharged option expenses Other

2004

€ 000’s 1,5752,9177,62412,116

-12,116

818-

818

2003

€ 000’s 3,5153,6956,104

13,31418,57531,889

606(3,746)(3,140)



7. Personnel costs

Group Wages and salaries Pension costs Other social security costs

2004

€ 000’s 34,602

1,739 4,189

40,530

2003

€ 000’s 43,828

2,0184,597

50,443

The pension plans in the Group are based on defined contribution basis.

The average number of Group personnel employed during the year may be analysed as follows:

Private Banking Asset Management Institutional Clients Ops & Support Group Continuing operations Discontinued operations

2004

1438571

12712

438-

438

2003

1619183

13916

490560

1,050

At 30 April 2003 the Trust activities have been sold. The average for the Trust has been calculated using the period end of 30 April 2003.

The primary segmentation in 2004 is based on divisions. The 2003 figures have been reclassified to be comparable with the current segmentation allocation.


8. Other general administrative expenses

Group Audit fees Other administrative expenses Company Audit fees Other administrative expenses

2004

€ 000’s 473

25,63726,110

241,1721,196

2003

€ 000’s 772

30,21930,991

551,5911,646

9. Provision Bad Debt

At 1 January Charge for the year Sale of Trust Group Write off/release

2004

€ 000’s 4,742

545-

(2,801)2,486

2003

€ 000’s 7,326

998(3,232)

(350)4,742



10. Taxation

The charge for the year can be reconciled to the profit per the income statement as follows:

The deferred tax assets for the Group relate to accrued tax on losses carried forward. The term of the net operating losses carried forward is indefinitely.

Profit before tax

Tax on profit before taxation at expected rate Tax on non deductible expenses 1 Tax on non taxable income Tax rate differences Effective tax rate / tax expense for the year * Deferred tax assets At 1 January 2004 Revenue for the year Sale of Trust Group Reclassify to current tax

Tax rate

30.4%

17%(37%)(25%)(14%)

2004

€ 000’s 3,274

(995)

(572)1,216

803452

8,919452

-(101)

9,270

2003

€ 000’s 2,265

(688)

(3,278)3,733

519286

6,115286

4,032(1,514)8,919

* This amount relates entirely to deferred taxes.1 Included under the tax on non deductible expenses are

certain tax losses for which the deferred tax asset has not been valued.


11. Earnings per share

Basic earnings per share: before the amortization of goodwill (cents) after the amortization of goodwill (cents) Diluted earnings per share: before the amortization of goodwill (cents) after the amortization of goodwill (cents) Basic earnings per share excluding discontinued operations: before the amortization of goodwill (cents) after the amortization of goodwill (cents) Diluted earnings per share excluding discontinued operations: before the amortization of goodwill (cents) after the amortization of goodwill (cents)

The additional basic and diluted earnings per share present earnings data after elimination of the effects of operations discontinued in the period.

Net profit for the year Adjustments for: Net result from discontinued operations Profit on disposal of Trust Group Earnings for the purposes of basic and diluted earnings per share excluding discontinued operations Adjustments for: Goodwill amortization continuing operations Earnings for the purposes of basic and diluted earnings per share excluding discontinued operations before goodwill amortization

2004

25.025.0

23.923.9

25.025.0

23.923.9

€ 000’s

2,904

--

2,904

-

2,904

2003

335.9218.3

325.2211.3

(11.8)(123.1)

(11.4)(119.2)

€ 000’s

43,255

3,41764,235

(24,397)

22,064

(2,333)



11. Earnings per share (continued)

Weighted averageNumber of ordinary shares outstandingDilutive potential ordinary sharesNumber of ordinary shares for the purpose of diluted earnings per share

2004

shares 11,630,789

540,49812,171,287

2003

shares 19,818,162

647,90920,466,071

Earnings per share figures before the effect of the amortization of goodwill are also disclosed for information purposes.

12. Treasury Bills

Treasury Bills

2004

€ 000’s 40,801

2003

€ 000’s 74,379

This represents 1 bill (2003: 3 bills) with a remaining life of less than 3 months (2003: less than 7 months). The Treasury Bills are valued at market value. The market value of these bills are based on quoted market prices.

13. Loans and advances to credit institutions

Group Maturity schedule – amounts repayable: on demand within three months

Company Maturity schedule – amounts repayable: on demand

2004

€ 000’s

113,2801,502

114,782

654

2003

€ 000’s

63,90147,452111,353

-

Diluted earnings per share take into account the effect of outstanding employee stock options and other dilutive equity instruments. See note 27.

€ 8,130,000 (2003: € 21,196,000) of the Treasury Bills have been pledged as security for the execution of payments and security settlement.


14. Loans and advances to customers

Group Maturity schedule – amounts repayable: within three months between three months and one year between one and five years

Notes

ab

b+c

2004

€ 000’s

71,97815,1323,923

91,033

2003

€ 000’s

118,54928,898

453147,900

Loans and advances to customers include:

(a) an amount due in respect of outstanding securities settlements of € 11,594,498 (2003: € 38,451,197) arising from transactions with professional counterparties; and

(b) a long-term receivable of € 28,642,990 (2003: € 27,599,000) for shares in Insinger de Beaufort Holdings S.A. issued to a special purpose company, on behalf of current and former senior employees of the Group and to staff through the Group’s Employee Share Ownership Plan Trust and related investment companies, the holder of 417,967 ordinary shares of € 2.00 each (2003: 1,029,813 ordinary shares, before buy back) and 230,954 Insinger de Beaufort Holdings S.A. Warrants 2008.

Pursuant to the proposals mentioned in the Circular to shareholders dated 10 July 2003, the Group has provided for the net liabilities relating to the Group’s Employee Share Ownership Plan in the amount of € 23,553,751 as at 31 December 2004. In addition, as announced by the Company on 10 July 2003, buy back of approximately 250,000 (2003: 910,000) shares by the Group from ESOP and related investment companies has been accounted for as Treasury shares and have been deducted from shareholder’s equity in the amount of € 1,750,000 (2003: € 4,550,000); and

(c) As part of the sale of Bank Insinger de Beaufort Plc, the Company provided a GBP 2,500,000 fixed rate unsecured subordinated loan note to UTB Partners Limited. GBP 400,000 of the loan note should be repaid on or before 31 May 2010. The remaining should be repaid on or before 31 May 2014. Early redemptions are permitted. Interest is fixed for the term of the loan note at 6.9 % per annum. The loan note is guaranteed by one of the directors of UTB Partners Limited to be repaid in five annual equal instalments commencing on 31 May 2006. The guarantee has been capped at a maximum of GBP 2,100,000.



15. Transferable securities

Transferable securities which are included in the following balance sheet categories may be analysed between listed and unlisted securities, and investment and trading portfolios as follows:

Group Debt securities and other fixed income securities Shares and other variable yield securities

Group Debt securities and other fixed income securities Shares and other variable yield securities

Listed € 000’s

17,276

1,54318,819

Held to maturity € 000’s

57

360417

Unlisted € 000’s

16,145

2,28318,428

Available for sale

€ 000’s

33,364

3,46636,830

2004

Total € 000’s

33,421

3,82637,247

Total

€ 000’s

33,421

3,82637,247

Listed € 000’s

24,386

1,59725,983

Held to maturity € 000’s

2,138

-2,138

Unlisted € 000’s

16,144

2,67418,818

Available for sale

€ 000’s

38,392

4,27142,663

2003

Total € 000’s

40,530

4,27144,801

Total �

€ 000’s

40,530

4,27144,801

On the debt securities € 1,049,232 (2003: € 1,487,906) of the available for sale portfolio has been pledged as security for execution of payments and security settlement. Of the debt securities € 16,144,663 is invested in Equity Trust Sarl (2003: € 16,144,663).

Included in the unlisted, available for sale shares is the Group’s holding of € 356,946 (2003: € 600,327) in the special purpose companies that held the Convertible Loan Notes on behalf of current and former senior employees of the Group (see note 3).


16. Shares in subsidiary undertakings

Company

2004

€ 000’s49,647

2003

€ 000’s 49,647

A list of significant subsidiaries held as direct and indirect investments of Insinger de Beaufort Holdings S.A. is disclosed in ‘Other Information’ on page 63.

17. Investments in Associates

GroupUTB Partners Ltd

2004

€ 000’s2,812

2003

€ 000’s -

This amount relates to a 25% interest in UTB Partners Ltd.

18. Financial fixed assets

GroupFinancial fixed assets

2004

€ 000’s752

2003

€ 000’s 838

This amount includes the non-consolidated investments of which € 679,775 (2003: € 679,775) relates to Equity Trust Sarl.



19. Goodwill

GroupAt 1 January Additions arising during the year a Sale of Trust Group Impairment charge Amortized during the year Foreign exchange translation adjustments At 31 December Accumulated depreciation at 31 December For segmented impairment information see note 34.9

Company At 1 January Amortized during the year At 31 December Accumulated depreciation at 31 December 2004

2004

€ 000’sCapitalized Goodwill

20,523262

---

8320,868

(27,480)

1,249-

1,249

(1,013)

2003

€ 000’sCapitalized Goodwill

81,1892,728

(34,361)(16,587)(6,720)(5,726)20,523

(42,950)

1,814(565)1,249

(1,013)

Starting the financial year 2004 IFRS 3 is applied and goodwill is no longer amortised but tested for impairment of its carrying value.

(a) 2004 represents mainly deferred consideration paid.


20. Tangible fixed assets

Net book value At 1 January 2004 Additions Disposals Depreciation Foreign exchange translation adjustments and otherAt 31 December 2004 Accumulated depreciation 2004 Accumulated depreciation 2003

Land and buildings € 000’s

4,906242

(2,814)(73)

992,360

(791)(1,511)

Computing equipment

€ 000’s

4,8951,117(662)

(1,804)10

3,556

(13,237)(12,633)

Other fixtures,

fittings and equipment

€ 000’s

2,6661,754

(22)(1,004)

73,401

(4,477)(4,051)

2004

Total € 000’s

12,4673,113

(3,498)(2,881)

1169,317

(18,505)(18,195)

The fair value of the fixed assets is estimated to be in excess of the carrying amounts.

Included in the land and buildings is investment property amounting to € 1,858,628 (2003: € 1,858,628).

21. Other assets

GroupOther receivables Prepayments and accrued income

Company Amounts due from Group companies Prepayments and accrued income

2004

€ 000’s22,1508,082

30,232

41,186-

41,186

2003

€ 000’s 15,913

9,93025,843

68,3881,559

69,947



22. Amounts owed to credit institutions

GroupMaturity schedule – amounts repayable: on demand

2004

€ 000’s

1,967

2003

€ 000’s

9,245

Company Maturity schedule – amounts repayable: on demand

2004

€ 000’s

-

2003

€ 000’s

61

Amounts due to credit institutions on demand include an amount of € 1,763,804 (2003: € 7,352,381) in respect of outstanding securities trading settlements.

23. Amounts owed to customers

GroupDeposits Maturity schedule – amounts repayable: on demand * within three months between three months and one year

2004

€ 000’s

197,70872,477

277270,462

2003

€ 000’s

243,074105,674

14,313363,061

Loans and advances owed to customers include:* an amount due in respect of outstanding securities

settlements of € 16,504,658 (2003: € 39,292,736).


24. Loan notes and other long term debt

Group Loan notes 2008 Deferred consideration loan notes Accrued interest compulsory convertible loan note Other Subordinated loan note

2004

€ 000’s--

251-

2518,9299,180

2003

€ 000’s 10,437

6,420275580

17,7128,929

26,641

On 2 April 2004 the Company announced that it wished to further improve the capital structure of the Company and to lower the Company’s financing costs. In line with the proposals to warrant holders and shareholders dated 2 April 2004, this was achieved by exercising and/or the sale of warrants by warrantholders. With the proceeds the Company has made an early repayment in full of the 9 % Fixed Rate Unsecured Loan Notes 2008.

On 24 December 2003 an Euro denominated, subordinated loan note 2008 in an amount of € 8,929,000 was issued by the Company to the note holder. The loan note is subordinated to all the current and future liabilities of the Company. The note will be redeemable on 1 July 2008 and in the meantime, will attract interest at the rate of the 12 month EURIBOR

plus 3% per annum. In the event that more than 30% of the Banking Group’s assets are distributed or sold, or if a controlling interest in the Company (namely, 30% or more of the issued ordinary share capital) is transferred to a single party, then within three months of such event, the note holder will be entitled to demand the early redemption of such loan note.

CompanyThe loan notes for the Company are entirely the same as for the Group only with the exception that the accrued interest of the compulsory convertible loan note is not included in the Company balance sheet. The compulsory convertible loan note has been issued by a Group company.



25. Other liabilities

GroupShort-term payablesAccruals and deferred incomePensionsTaxationOther

Company Short-term payables Accruals and deferred income Amounts owed to Group companies Taxation

2004

€ 000’s23,18311,977

72307

9135,630

6355,432

7322

6,396

2003

€ 000’s 21,43311,688

81362

1233,576

3,3682,6554,009

32210,354

26. Treasury shares

GroupThe movement of Treasury shares is as follows:

At 1 January (Ordinary shares of € 2.00 each) Movement in Treasury shares before buy back Share buy back * Movement in Treasury shares after buy back Used for warrant exercise Movement in Treasury shares At 31 December

2004

€ 000’s

3,047,075---

(2,579,189)5,223

473,109

2003

€ 000’s

677,4931,754,627

(1,216,060)1,831,015

--

3,047,075

The Treasury stock are not deducted from the Company balance sheet as they are held by a consolidated subsidiary.

* This relates to the share buy back and cancellation of shares as proposed in the Circular to shareholders dated 10 July 2003 which were approved in the shareholders meeting of 4 August 2003.


27. Options

The Company has issued various call option series to staff and staff related vehicles. One option gives the right to acquire one share at the respective exercise price. The following number of options were outstanding as at 31 December 2004:

Number of options in issue

ExerciseDate

25 October 20059 June 200725 October 200725 October 200725 October 200725 October 200725 October 200825 November 20099 November 200921 December 2009

21 October 200721 October 200721 October 200525 October 200526 January 2006

at 31 Dec2003

281,510

283,24222,84716,90055,850

875,000982,000

2,517,349

353,12276,130

325,000100,000139,129993,381

3,510,730

issued

95,000

327,400100,000522,400

-

522,400

cancelled

35,217

52,7007,095

6904,310

47,50010,000

157,512

-

157,512

at 31 Dec2004

246,29395,000

230,54215,75216,21051,540

827,500972,000327,400100,000

2,882,237

353,12276,130

325,000100,000139,129993,381

3,875,618

ExercisePrice

4.04 6.00 3.70 4.04 3.20 3.52 4.70 5.35 6.50 7.50

4.00 4.00 4.12 4.08 2.82

Cappedprofitabove

29.40 29.40 21.92 12.34 12.12

VestingPeriod

Applicable

yesyesyesyesyesyesyesyesyesyes

nonono

yesyes

Where a vesting period is applicable the option rights can only be exercised when the person is still employed in the Group at the exercise date. Otherwise the person can only exercise the number of vested options as earned up to the date of the end of his or her employment.

All options granted during the year where with exercise prices above market value and therefore no costs have been recorded during the year.



28. Warrants

On 2 April 2004 the Company announced that it wished to further improve the capital structure of the Company and to lower the Company’s financing costs. In line with the proposals to warrant holders and shareholders, dated 4 April 2004, this has been achieved by the exercise of 2,579,189 warrants. The proceeds arising therefrom were applied towards the early repayment of the 9% Fixed Rate Unsecured Loan Notes 2008.

Only with respect to the first exercise period, which started on 25 May 2004 and ended on 24 June 2004, the Company proposed to change the exercise price of the warrants from € 6.00 to € 4.60. The Company has procured that warrantholders received the ordinary share(s) in respect of the warrants exercised from the Company and/or one of its subsidiaries.

In addition to the amended exercise, the Company invited warrantholders, who did not elect to exercise all or part of their warrants during the first exercise period, to sell (all or part of ) their warrants to the Company at a price of € 1.45 per warrant during the first exercise period. Warrants so purchased by the Company are cancelled.

At 1 JanuaryRepurchasedExercisedAt 31 December

Outstanding

4,129,192(345,336)

(2,579,189)1,204,667

Owned by Group Companies and ESOP

828,05435,339

-863,393

Net

3,301,138(380,675)

(2,579,189)341,274

All other terms and conditions of the warrants, including the exercise price of € 6.00 in respect of future exercise periods, will remain unchanged.

In extraordinary meetings of shareholders and warrantholders held on 26 April 2004 the proposals were approved.

In accordance with the terms of the amended exercise 2,579,189 warrants have been exercised. This has resulted in an increase in shareholders’ equity of approximately € 10 million.

In accordance with the invitation to the warrantholders to sell the warrants to the Company 380,675 warrants were repurchased and cancelled.


29. Shareholders’ compulsory convertible loan note

On 24 November 2003, a Group company issued a compulsory convertible loan note (“CCLN”) of € 1,475,000 to part of senior management of the Group. The CCLN will mature in 2011 and will pay 150 basis points above the 3-month EURIBOR and ranks pari passu with all other unsecured obligations of the Group. The conversion rate has been set at € 5.00, which will lead to an issuance of 295,000 shares in 2011.

The CCLN is accounted for as shareholders’ compulsory loan note of € 1,223,668 (2003: € 1,200,000) and accrued interest of € 251,332 (2003: € 275,000) (see note 24 for further explanation).

30. Derivatives

The Group hedges its foreign currency positions by ways of forward contracts mainly relating to the GBP. The results of these forward contracts are recorded as translation adjustments and other movements in the other reserves. At year end the Euro equivalent of sold forward contracts amounted to € 25,415,100 (2003: € 31,223,329). The forward contracts will be renewed on a revolving basis as required.

From time to time clients of Insinger de Beaufort in the UK enter into Contracts for Difference ('CFD') with third party providers. As security for these CFD's clients pay in cash collateral with these providers. Insinger de Beaufort in the UK has given an indemnity to the third party providers for losses they may incur on clients introduced by Insinger de Beaufort, that fail to perform any of their obligations under the terms of the CFD's. As per the end of 2004 the total nominal underlying value of the CFD positions of clients amounted to GBP 263 million.



32. Contingent assets & liabilities

Group Contingent asset: This represents the deferred consideration loan notes due by Equity Trust Sarl

Contingent liability: Guarantees and other direct substitutes for credit

2004

€ 000’s11,464

8,148

2003

€ 000’s 11,464

9,536

31. Leasehold commitments

Group commitments due under non-cancellable operating leases may be summarized as follows over the periods in which amounts fall due:

Amounts payable: within one year more than one year and less than five years more than five years

2004

€ 000’s

3,93817,7854,948

26,671

2003

€ 000’s

3,88711,6729,943

25,502

Operating leases represents mainly rentals payable by the Group for certain of its office properties. The leases have varying terms, escalation clauses and renewal rights.

The Company had no commitments under non-cancellable operating leases at 31 December 2004 (2003: € Nil).


33. Litigation

As per 30 April 2003 the group has sold its Trust Group activities. As part of the sale and purchase agreement, it was agreed that the Trust Group would have a certain amount of working capital as per 30 April 2003 determined on the basis of agreed accounting principles (“Completion Accounts”). The Trust Group has prepared the Completion Accounts and the Company has raised objections against these accounts. The Company claims that the working capital has been reflected too low in the Completion Accounts for a total amount of € 3.2 million. The purchaser of the Trust Group has subsequently raised additional items that would lower the working capital presented in the Completion Accounts with € 2.5 million. The Company is contesting the validity of these new items as being brought forward after the preparation of the Completion Accounts in contravention with the sale and purchase agreement and as not being in line with the applicable accounting principles.

The accounting in the financial statements of the Company has been based on the original Completion Accounts as prepared by the Trust Group, without taking into account the new items introduced by the purchaser of the Trust Group nor the amounts that are disputed by the Company. The Company continues its negotiations with the purchaser of the Trust Group to resolve the differences and believes that the likely outcome will have no negative effect on these financial statements.

The purchaser of the Trust Group has made a claim against the Company under the warranties provided in the sale and purchase agreement. This claim relates to damages incurred and potentially to be incurred by the Trust Group from an alleged error made by the Trust Group in the services provided to a client. The Company is in proceedings brought forward by the purchaser of the Trust Group before the High Court in England. The amount of damages claimed is uncertain but preliminary indications show a potential amount of damages of approximately GBP 4 million.

The Company believes the claim is unfounded and is vigorously denying any liability.

NUSA SIM SpA (“Nusa”), a company acquired by the group in 2001, has been involved in a court case in Rome in relation to claims made by two clients on losses incurred by them on the purchase of certain securities on which Nusa acted as a broker. In January 2005 Nusa has been informed of a court ruling condemning Nusa to unwind the original sale of the securities and to pay € 3.2 million plus legal interest and inflation damages.

Part of the purchase price paid for Nusa has been paid into escrow for potential damages incurred on this case. Including earned interest the amount in escrow is approximately € 0.4 million. The Company believes the court ruling has been based on incorrect legal grounds and is in a process to file an appeal. The Company believes it has strong grounds for appeal and that it is more likely than not that the court ruling will be overthrown in an appeal.



34. Segmental analysis

For management purposes, the Group is currently organised into five operating divisions - Private Banking, Asset Management, Institutional Clients, Ops & Support and Group. These divisions are the basis on which the Group reports its primary segment information. Principal activities are as follows:

Private Banking - Wide range of services on behalf of individuals

Asset Management - Activities which offer individuals and institutions a comprehensive choice of funds

Institutional Clients - Wide range of services on behalf of institutions and corporate clients

Ops & Support - Operations & Support areas within the Group

Group - Includes all Group activities such as legal, head office and financing activities

Included under the geographical segments is the category Other. This includes amongst other the British Virgin Islands, the Channel Islands and South Africa.

34.1 Segmentation of gross income

Group Private Banking Asset Management Institutional Clients Ops & Support Group Continuing operations Discontinued operations

2004

€ 000’s30,53923,95119,089

(474)2,272

75,377-

75,377

2003 *

€ 000’s 28,78819,85522,226(2,176)

(324)68,36921,68990,058

* The 2003 figures have been reclassified to be comparable with the current segmentation allocation.

European Union Rest of Europe Other Continuing operations Discontinued operations

2004

64,6017,9512,825

75,377-

75,377

2003

42,4067,722

18,24168,36921,68990,058


34.2 Segmentation of profit before taxation


2004

€ 000’s675

6,477628

(4,009)(497)3,274

-3,274

2003 *

€ 000’s (89)

4,560351

(2,604)(4,641)(2,423)

4,6882,265



2004

(206)1,182

2,2983,274

-3,274

2003

(5,813)1,153

2,237(2,423)

4,6882,265



34.3 Current year depreciation and amortization charge by business segment and region


2004

€ 000’s390139

-2,352

-2,881

-2,881

2003 *

€ 000’s 6,8691,224

13,9793,468

53826,078

1,99228,070



2004

2,730151

-2,881

-2,881

2003

24,252244

1,58226,078

1,99228,070


34.4 Concentration of credit risk and currency risk

Group Financial institutions Other customers Continuing operations European Union Rest of Europe Other Continuing operations

2004

€ 000’s114,78291,033

205,815

188,78216,483

550205,815

2003

€ 000’s111,353

147,900259,253

233,14025,513

600259,253

The loans and advances to credit institutions and customers may be analysed by sector and geographical region as follows:

The total Euro equivalent of assets in foreign currencies is € 4,355,504 (2003: € 53,719,088) while the total Euro equivalent of liabilities in foreign currencies is € 14,406,992 (2003: € 26,360,745).

GroupEuropean UnionRest of EuropeOther

2004

€ 000’s47,402

6,142(4,239)49,305

2003

€ 000’s33,1036,029

49239,624

34.5 Net assets by region

Net assets, defined as shareholders’ equity plus shareholders’ convertible loan note, can be specified as follows:



34.6 Total assets by region


2004

€ 000’s320,905

19,43426,205

366,544

2003

€ 000’s 417,029

27,79027,427

472,246

34.7 Total liabilities by region


2004

€ 000’s273,503

13,29230,444

317,239

2003

€ 000’s 383,926

21,76126,935

432,622


34.8 Tangible and intangible fixed assets acquired in the year by region

GroupEuropean Union Rest of Europe Other Continuing operations Discontinued operations

2004

€ 000’s2,796

579-

3,375-

3,375

2003

€ 000’s3,381

6511,3735,4051,7647,169

34.9 Impairment charge for the year by region

Group European Union Other Continuing operations Discontinued operations

2004

€ 000’s-----

2003

€ 000’s19,641

18719,828

-19,828

The impairment charge includes € nil (2003: € 16,587,000) goodwill impairment and € nil (2003: € 3,241,000) valuation adjustment on tangible fixed assets.



35. Dividends

A dividend of 12 eurocent per ordinary share totalling € 1,549,497 (2003: 8 eurocent per ordinary share totalling € 827,081) is proposed by the Board of Directors and is payable as soon as possible after shareholder approval at the general meeting on 23 May 2005 to those shareholders registered on 16 May 2005. The dividend proposal has not been included under the liabilities in the Financial Statement. Dividend payments are exempt from withholding tax.

36. Group asset and liability management

The risk management process of the Group is fostered through a formal substructure in which executive management is made responsible for ensuring that risks and controls are addressed in each of their operations. Our risk management department provides them with conceptual support in order to ensure that this process is consistent and adequate for the environment in which we operate.

Specific expertise is provided by our Group Risk Committee, Compliance Department and the Asset & Liability Committee who support executive management with managing respectively integrity and credit risks, compliance risks and market & liquidity risks.

An additional layer of comfort is provided by our internal audit who independently scrutinise the ongoing adequacy of this structure and report their findings directly to the Audit Committee who supervise our risk management and control systems on behalf of the Board.

Our risk profile towards our balance sheet is based on an ongoing assessment of the environment resulting in high liquidity, limited credit and market risk exposures and a healthy capital base as per the end of 2004.

The Group has a policy to hedge all foreign currency exposures and not to take trading positions in securities. From time to time equity and bond broking desks may take limited positions to facilitate the broking activity. These positions are controlled through relatively limited intra day and overnight limits. Our interest rate mismatch is controlled through a relatively limited one day value at risk (VAR) limit that is monitored daily and adjusted for actual results achieved during the year. The VAR limit may be changed on the basis of an evaluation of our risk tolerance in relation to our net income. Our credit policy is to extend credit on the basis of sufficient liquid collateral. This collateral is mostly comprised of listed securities with sufficient liquidity or mortgages on residential property.


List of significant investments

Direct InvestmentsName Registered office Issued equity held % Insinger de Beaufort Finance Sà rl Luxembourg, Grand-Duchy of Luxembourg 100Insinger Finance (BVI) SA Tortola, British Virgin Islands 100Insinger Trust Holdings Limited Tortola, British Virgin Islands 100

Indirect investmentsName Registered office Issued equity held % Bank Insinger de Beaufort NV Amsterdam, The Netherlands 100Insinger de Beaufort London, United Kingdom 100Insinger Asset Management AG Zug, Switzerland 50Insinger de Beaufort Asset Management NV Amsterdam, The Netherlands 100Insinger de Beaufort Holding BV Amsterdam, The Netherlands 100Insinger de Beaufort International Limited St Helier, Jersey 100Insinger de Beaufort Investments Limited Tortola, British Virgin Islands 100Insinger de Beaufort (Luxembourg) SA Luxembourg, Grand-Duchy of Luxembourg 100Insinger de Beaufort SA Genève Geneva, Switzerland 100Insinger de Beaufort (UK) Limited London, United Kingdom 100Reitsma & Wertheim & Partners BV Amsterdam, The Netherlands 100

Non consolidated indirect investmentsName Registered office Issued equity held % Equity Trust Holdings Sà rl Luxembourg, Grand-Duchy of Luxembourg 13.60UTB Partners Ltd London, United Kingdom 25

Other Information

64 Insinger de Beaufort Annual Report 31 December 200464 Insinger de Beaufort Annual Report 31 December 2004

Channel IslandsP.O. Box 177 38-39 Esplanade St Helier Jersey JE4 8RF Channel IslandsTel +44 (0)1534 708090 Fax +44 (0)1534 [email protected]

Isle of ManCommonwealth House 20 Athol Street Isle of Man IM99 2NATel +44 (0)1624 690 100 Fax +44 (0)1624 690 [email protected]

ItalyVia dei Due Macelli 4800187 Roma ItalyTel +39 06 69 00 21 Fax +39 06 69 94 15 [email protected]

Luxembourg66 avenue Victor Hugo L-1750 LuxembourgGrand Duchy of LuxembourgTel +352 46 92921 Fax +352 46 [email protected]@insinger.com

NetherlandsHerengracht 537 1017 BV Amsterdam P.O. Box 10820 1001 EV Amsterdam The NetherlandsTel +31 (0)20 5215 000 Fax +31 (0)20 5215 [email protected]

Tournooiveld 3 2511 CX Den HaagThe NetherlandsTel +31 (0)70 3123 970 Fax +31(0)70 3123 [email protected] Parklaan 60 5613 BH EindhovenP.O. Box 365 5600 AJ EindhovenThe NetherlandsTel +31 (0)40 265 5255 Fax +31 (0)40 245 [email protected]

South Africa7th Floor The Forum Cnr Maude & Fifth Street Sandton 2196P.O. Box 78112 Sandton 2146South AfricaTel +27 (0)11 217 4800 Fax +27 (0)11 217 [email protected]

United Kingdom131 Finsbury Pavement London EC2A 1NTUnited KingdomTel +44 (0)20 7190 7000Fax +44 (0)20 7190 [email protected]

Switzerland14 Boulevard des Philosophes 1205 GenevaP.O. Box 530 1211 Geneva 4SwitzerlandTel +41 (0)22 320 4740 Fax +41 (0)22 320 [email protected]

Insinger de Beaufort Offices

ins045-02 annual report 2004 - blue marlin holdings

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